Page 17 - Jillian McWilliams

4 Proven Ways Real Estate Can Build Sizable Family Wealth

David Greene, co-host of the BiggerPockets podcast and a nationally renowned author and

speaker, recently wrote an article in Forbes explaining how investing in real estate could help
build wealth. Many of the points he made also apply to a family owning their own home.
Here are a few:

1. Appreciation

“The rising of home prices over time, is how the majority of wealth is built in real estate.
This is the ‘home run’ you hear of when people make a large windfall of money. While prices
fluctuate, over the long run real estate values have always gone up, always, and there is no
reason to think that is going to change.

One thing to consider when it comes to real estate appreciation affecting your ROI is the
fact that appreciation combined with leverage offers huge returns. If you buy a property
for $200,000 and it appreciates to $220,000, your property had made you a 10% return.
However, you likely didn’t pay cash for the property and instead used the bank’s money. If
you consider that you may have put 10% down ($20,000), you actually have doubled your
investment, a 100% return.”

2. Leverage

“By nature, real estate is one of the easiest assets to leverage I have ever come across—
maybe the easiest. Not only is it easy to leverage the financing of it, but the terms are
incredible compared to any other kind of loan. Interest rates are currently below 5%, down
payments can be 20% or less, and loans are routinely amortized over 30-year periods.”

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